End of Uncertainty?

Singly, then like leaves in a gusty rustle of thousands, the letters came down. Some indignant, some pleading—all asking repeal of a once-minor piece of legislation: the law covering the renegotiation of war contracts. Last week the crackling corporate stationery and the yellow telegrams—2.000 in two days—fell on the Senate Finance Committee. Said Chairman Walter F. George: “As the law now operates it is definitely slowing up production.”

Slapped through last April to quench public indignation at the scandalous profits in the Jack & Heintz case (TIME, April 6) and others, the present law provides that on all war contracts in excess of $100,000 the Army, Navy and Maritime Commission may investigate manufacturers’ costs and scale down excessive profits.

Simple as this sounds it is full of jokers. There is no definition of “excessive” profits. The services can march in at any time to examine the books. They can come as often as they like, taking up any amount of company executives’ time in renegotiating the profits allowed. Renegotiation may be called for any time until three years after war’s end, which means that no company can be sure of its profits (or losses) until that date. And a company not sure of its profits cannot satisfy bankers of its ability to repay loans needed to get the work done.

When the directors of Big Steel journeyed to Chicago for a meeting (their first outside New York) last week, Chairman Irving S. Olds pointed to the renegotiation law, remarked wryly: “We are in the peculiar position of doing the greatest business in our history and selling our goods without knowing the price we are getting. . . . Any quarterly or six-month financial report of a large corporation engaged in war production is nothing more than a forecast.”

The little law struck other big sparks. Ernest R. Breech, president of Bendix Aviation said, “It is the greatest deterrent to increased war production that could possibly be thought of.” President Roger D. Edward of Atlas Tack dolefully wired to Senator George, “A large group of key management personnel in industry are just about ready to throw up the sponge and join the Army as buck privates.” Appointed last week, a Senate subcommittee is working out an answer to the problem of giving business some end to uncertainty, some limit to the number of times a renegotiation board can reopen a contract.